By Tiernan Ray

Barclays Capital’s Ben Reitzes this morning reiterated an Overweight rating on shares of Apple (AAPL) while cutting his price target to $740 from $800, writing that “We believe it is prudent to temper C1H13 expectations as Apple readies new products and services to be launched in the Spring and through mid-year.”

Reitzes raises his December-ending fiscal Q1 for Apple, based on higher sales of the iPhone. However, he also cut his full-year estimates given that he expects Apple will be on average getting lower prices for the iPhone, and given that he thinks the lower-priced iPad Mini will cannibalize the larger-size model, both factors reducing aggregate revenue and margins.

Reitzes’s estimate for the December quarter rises to $54 billion and $13.38 per share in profit from a prior $52.4 billion and $13. His full-year estimate goes to $194.8 billion and $49 per share in profit, down from $196.1 billion and $50.92 per share. For fiscal 2014, he cut his estimate to $221.4 billion and $57.45 per share from a prior $230.9 billion and $60.66.

Reitzes is now modeling Apple to have sold 47 million iPhones last quarter, up from his prior 43.5 million-unit estimate. For the March quart, he cut his number to 40 million from 43.5 million, citing supply chain “checks.” His full-year estimate goes up, to 165.6 million units from a prior 158.4 million.

For the iPad, Reitzes cut his full-year number to 88.9 million from a prior 96.3 million, with a greater mix of iPad mini units.

Reitzes opines that Apple’s stock is in a “rare” position, where expectations have come down low enough that they perhaps underestimate the company’s potential growth:

We believe that Apple is in a rare situation in CY13. Expectations are actually low and getting lower. We believe that many investors fear iPhone sales will be relatively flat this year and that there will be no move into TV that moves the needle. Consensus estimates have moved down steadily in recent months – and we believe that the buyside is finally in equilibrium with the average sellside figures in aggregate. We do believe it is prudent to temper C1H13 expectations as Apple readies new products and services to be launched in the Spring and through mid-year. However, our research still points to March quarter iPhone unit sales growing over 15% y/y – but we believe many investors now believe that sales will be flattish given component ordering trends out of Asia. We believe that iPhone sales can still grow at a 20% pace for a few years if the company can expand its line-up successfully.

Reitzes also thinks that hardware models across the product lines are not as important this year as are new cloud-computing services from the company’s iCloud service, with a particular importance for the company to establish itself in the mobile payments business:

Perhaps more importantly, we also believe CY13 is a critical year for Apple in its battle against Google (GOOG) (Android, Maps) and Samsung. While most investors talk about hardware, we believe the critical thing this year for Apple is to establish itself further in web services – by weaving more features into iOS 7. We believe that web services are the next real battleground for Apple and the key for shareholder confidence. One could argue that shares hit an inflection point to the downside when investors realized that the Apple Maps endeavour was a mistake. The maps debacle showed investors how valuable’s Google technology was – how hard it was to replicate – and how Apple may struggle as the world moves beyond iTunes toward cloud-based services. We believe Apple can turn the tide with a real move into payments, an integrated iOS-led television service and improvements to iCloud (including subscription-based services). These types of services could re-convince investors that Apple’s ecosystem carries a high switching cost and reinforce the value of an “iOS subscriber.” We believe there is a perception that Amazon and Google are better in web services than Apple – and in order to command more investment dollars – Apple needs to take its innovation in this direction. See our report titled “Something To Be Learned from the Corrections of Other Disruptors?” published on 12/18/12.

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There are 23 comments

JANUARY 7, 2013 1:48 P.M.

Bob wrote:

Tim Cook and the Apple Management Team can give 2 F’s about shareholders or investors. They are about getting rich themselves and are in fact the only people making money. They are filthy rich on the options they grant themselves and they make $millions and could care less about anyone else. Tim Cook and Peter F Face haven’t a clue on money management and their $B in the bank continues to rot away. I cannot wait until this earnings report when Tim Cook announces his 4th miss out of 5 earnings, and lowers forecast. The stock will get crucified and the Board will finally realize these 2 Jokers along with the rest of this so-called Elite Team, need to be Fired and Fired fast. It is a DISGRACE what they have let happen to the stock and their code of silence is simply obsolete. There ain’t no Steve Jobs coming out anymore behind the Black Curtain. It’s simply Tim Cook with his Incompetent Staff ready to read you another Bedtime Story full of Excuses and BS. At this point, the Earnings could be Tremendous but Who Cares. So the stock goes from 500 to 550! Whoppie Shi_ The damage has already taken place. Apple is Dead.

JANUARY 7, 2013 1:48 P.M.

Anonymous wrote:

your an idiot

JANUARY 7, 2013 1:48 P.M.

Ron wrote:

Another Clown heard from the Circus.

JANUARY 7, 2013 1:51 P.M.

Peter wrote:

Apple lost it's Arrogance and it's Balls! Being run by Pussies now.

JANUARY 7, 2013 1:58 P.M.

Spent wrote:

Agree with what Bob and Peter say. Apple
is no longer feared nor is it the King it once
was. Fact is, no competitor fears them, they
just laugh at them and the King is dead.

JANUARY 7, 2013 2:01 P.M.

StonehamMel wrote:

It's amazing how people like "Ron" can consider themselves capable of judging Apple management. Stock price in this market has nothing to do with fundamentals and everything to do with baseless pessimism. Back around $350-400, we heard about the "law of large numbers" holding back the stock. Far from missing forecasts on 1/23, they're much more likely to blow them out.

The "code of silence" crap is just that - crap. They announced the first weekend sales of the iPhone 5 in China. They announced the 40 billionth app sale today, half in 2102, and that they sold 2 billion in just December. They let the quarterly numbers speak for themselves - and they've never offered any bullsh*t excuses for missing Street estimates.

Ron, no one is making you hold your stock - if you in fact own any. My guess is, you're just another loudmouth showboater like so many "analysts" who get a Google listing by slamming the stock. Why don't you just sell, if you HAVE anything to sell, and get out before your chicken-little forecast comes true?

JANUARY 7, 2013 2:02 P.M.

Anonymous wrote:

it's 50/50 on Apple as far as the Stock goes up or down, however there is only 50 $ on the upside and 150 $ on the downside . Apple is a bear trade.

JANUARY 7, 2013 2:21 P.M.

Bob wrote:

@Mel: Face the facts. Apple since September
is down 200 points. Apple has been attacked
daily by TV, Analysts, and Newspapers. For
what was once the number 1 company in
the world just 4 months ago, the state of
this company is pathetic. It has no Leadership
and has in fact lost it's Hip/Cool factor
and it's Arrogance. Apple is just middle
of the road now. It's Brand and it's Dominance
is no longer. Fact is, the Stock Price sux
and its Brass Balls leadership is non existent

JANUARY 7, 2013 2:27 P.M.

Roger wrote:

More mumbo jumbo on Apple. Everyday
nothing but mumbo jumbo. Here is all
you need to know: Google 740, Apple 525
Game,Set, Match goes to Google. Now
stop all the BS. That's it.

JANUARY 7, 2013 2:37 P.M.

Gregg wrote:

How do you figure the Maps transition was a failure? Apple took advertising revenue from Google, and also made them add feature parity to their IOS maps so Android would no longer have any advantage over Apple. Apple never even experienced a momentary slow down in sales because customers knew that the problems would be fixed. The bad press probably even helped to keep Apple in the news, more free mindshare.

JANUARY 7, 2013 2:42 P.M.

Sid wrote:

Amazon flying up 9, Netflix up again plus 5, and then we have Apple. Down 6. What else is new. Sad Sad Sad.

JANUARY 7, 2013 2:44 P.M.

Vaugh wrote:

RIP Apple.

JANUARY 7, 2013 2:47 P.M.

Pete wrote:

Schmidt in N Korea blazing new territory and opportunity, while Cook deals with Suppliers on Part Issues. Wow, Leadership at its best.

JANUARY 7, 2013 3:15 P.M.

Rob wrote:

If you will, a moment of silence for Apple.
May it Rest In Peace. Thank You

JANUARY 7, 2013 3:55 P.M.

Bill wrote:

Funny how Barrons forgot to mention
that Apple is RC Bairds number 1 pick with
a 750 PT. Will Powers was on CNBC today.
Did you forget or just didn't feel like
writing it cause it was positive?

JANUARY 7, 2013 4:03 P.M.

Market Mayhem wrote:

Amazon is making Apple shareholders look rather stupid. It seems as though those cheap Kindle Fires are selling better than iPads. Amazon is on the rise and Apple is on the wane. We're witnessing the changing of the guard. Apple is no longer the darling of Wall Street. Apple has become a toothless, old, curbside hooker who's turning tricks for a $1. I've never seen a company fall so fast... Well I did watch RIM fall pretty quickly, but Apple has more cash in the bank than RIM ever had. It's not the fact that Apple is falling so hard, but Amazon is just kicking Apple's butt so hard despite making such little money. One moment I'm reading how Apple is taking down Microsoft, but in the meantime Samsung is picking Apple's pockets so cleanly that Apple is in a death spiral.
I'm not exactly sure what Tim Cook is doing except twiddling his thumbs. I think he comes into headquarters in the morning, falls asleep at his desk and doesn't wake up until it's time to leave. Obviously shareholder needs never enter into his dreams. I'm willing to bet all the Apple executives are dipping into the reserve cash and putting it into Swiss bank accounts so they'll have a nest egg when Apple goes bankrupt.
How is it that Samsung can sell so many smartphones and Apple can't? Wall Street is going laugh when they find out Apple only sold 50 million iPhones for an entire quarter. The stores are always packed, right? Samsung doesn't have a single store and it can sell twice as many smartphones. Tim Cook isn't doing a darn thing to reassure investors. He just sleeps all day long. Apple could buy both Amazon and Netflix and yet Apple is being made into a laughingstock by both companies. It's an awful nightmare how money goes into a company and never comes out. A proverbial "black hole" for shareholders. Get ready for Apple shares to tank on the usual disappointment when quarterly earnings are announced. This whole year has been a disappointment for shareholders. I've come to dread hearing quarterly earnings since I know Apple isn't going to beat any of Wall Street's expectations. Apple and Apple shareholders are as good as dead meat. Thanks, Tim, for making shareholders lives a living financial hell.

JANUARY 7, 2013 4:06 P.M.

Macrimony wrote:

Crap! Not another downgrade! That makes it 20 in a row. Taketh from Apple and giveth to Amazon and Google. Why the hell can't Apple sell anything yet Amazon can?

JANUARY 7, 2013 4:33 P.M.

Ed wrote:

Like I said earlier, Apple is being led by a
bunch of Pussies who have no F idea what
they are doing. Pussies giving themselves
more stock options and counting their
millions while the company goes bankrupt

JANUARY 7, 2013 4:42 P.M.

Rick wrote:

Like Rick Pitino said to Boston Fans when
the Celtics from first to last in 1 year, he said
Bird, Mchale and Parrish are not coming
through those locker room doors anymore,
I say the same to all Appleolians worldwide
and that is Steve Jobs ain't coming back
to Apple anymore, so get use to Last
Place in la la land

JANUARY 7, 2013 4:56 P.M.

WhatNowLA wrote:

What a bunch of And(hem)roid trolls on here.
Apple was up 32.56% in 2012.
Google was up 9.52% in 2012.
Game, Set and Match goes to who? That's right Apple.
As for Amazon, go ahead and keeping investing in them.
Because one day the stock is gonna come back to earth.
And yes Tim Cook could give a rats behind about the investor.
Apple still is making more money than any other tech company out there.
The only earnings disappoint they have had is those idiotic estimates put out by the analysts.
So until Apple's earnings actually fall, he gets a pass.

JANUARY 7, 2013 5:16 P.M.

Ned wrote:

Aplple and Tim Cook do nolt get a pass. In fact, they get an F. Cook and his overpaid Cronies have destroyed the number 1 company in the world in record time, only took 4 months! Samsung, Google, Facebook and Amazon are eating Apple for Breakfast, Lunch, and Dinner. They are kicking Apple's butt
all over the place and laughing while they do it. Stop the defending of Cook and Apple. He has failed. He and Peter Pan the CFO, may as well hold a bonfire in Cupertino and invite all the employees and shareholders to watch the burning of $120B in cash. May as well get to watch a good fire cause these 2 nit wits haven't done jack with all this cash. Their return is negative. The days of Glory for Apple are over. The empire has crumbled. Living off of Steve Jobs Coat Tails is over. Cook and his Cronies should cash in all their options and retire. Apple is simply the next Rimm, Dell and HP. They are dead men walking they just don't know it. It is Game Set Match Google for all you wanna bes that are hanging on by a dime. Google 730, Apple 522. Pretty clear who won! Apple should hire either Page or Schmidt and save this company from further embarresment and backruptcy.

JANUARY 7, 2013 5:37 P.M.

Mr. Pragmatic wrote:

Apple has a ecosystem that no one has yet- convergence across phone, tablet, pc etc, and rumors of a smart tv in near future. Until a number of companies group together and build a competitive ecosystem- apple will not disappear.
The recent 5 months of stock price volatility is more affected by people cashing out before tax changes, and pension funds taking gains, then with long term prospects. I prefer not to engage in a "holy war" against any tech company- it is basically rather like arguing about which glass of wine tastes better. I think apple is a great stock to hold for at least the next 5 years minimum.
Full disclose I own apple, google and amazon, and have no desire to sell anytime in the next 5 years.

JANUARY 7, 2013 7:16 P.M.

Don wrote:

Who compares straight up stock quotes? As if GOOG being 734 and AAPL being 534 means anything. AAPL market share is twice that of GOOG. Either way, I agree Apple is struggling. I'll be looking for another buying opportunity if the stock slips to the low 400's.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.